The Australian economy contracted the most in almost eight years last quarter as construction and government spending slumped. The currency plunged almost US$0.005.
GDP fell 0.5 percent from the previous quarter, when it gained a revised 0.6 percent. The result was the worst since the depths of the global financial crisis at the end of 2008 and well below economists’ estimates of a 0.1 percent drop.
The economy grew 1.8 percent from a year earlier, compared with a forecast 2.2 percent gain.
The report spans a period when an election returned Australian Prime Minister Malcolm Turnbull with a razor-thin parliamentary majority, while government spending and resource exports failed to lift growth.
The slowdown in annual growth from 3.1 percent in the second quarter is dramatic, particularly when the Australian Treasury forecast the economy’s potential at 2.75 percent and central bank forecasts matched or exceeded that level.
“We’re still confident that this is just a perfect storm of negatives and we shouldn’t be talking about technical recessions — we should be talking about what rebound we can expect for the fourth quarter,” TD Securities Ltd head of Asia-Pacific research Annette Beacher said in Singapore, referring to two consecutive falls in GDP. “It just seemed like an unexpected confluence of negatives that all happened to be concentrated in one quarter.”
The Australian dollar bought US$0.7430 at 12:56pm in Sydney, compared with US$0.7467 before the data.
Private investment in new buildings cut 0.3 percentage points from GDP. New engineering, and new and used dwellings shaved 0.2 and 0.1 percentage points respectively.
The household savings ratio fell to 6.3 percent from a revised 6.7 percent, which helped support household spending.
The terms of trade, a gauge of export prices relative to import prices jumped 4.5 percent. Household spending rose 0.4 percent.
“Reduced building activity is reflected in the output of the construction industry, which fell 3.6 percent for the quarter and was the largest contributor to the fall in GDP growth on an industry basis,” the Australian statistics bureau said.
Australian Treasurer Scott Morrison cited a decrease in new business investment of 3.2 percent when speaking to reporters after the release of the figures, adding that “this is the 12th consecutive quarter where new business investment has declined.”
A failure to spur non-mining investment has plagued Australian policymakers in the past few years.
Many observers suggest uncertainty is part of the problem, encompassing anything from the state of the global economy to Britain’s vote to leave the EU to the election of Donald Trump in the US.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to